It’s a new year and the best time to get your finances in order. Why not make 2021 the year to get organized and become more sensible with your cash? It can seem like a daunting task, but you are not alone and there are many steps you can take.
Karen Barrett, the chief executive of unbiased.co.uk, said: “The best tip I can give is to make an appointment to see a financial adviser. Sorting out your finances is like deciding to get fit – the sooner you act the better, and if you have someone helping you to focus on the important things and chivvying you along, all the better.”
If you decide that seeing a financial adviser is something you do want to do, it is important to take a look at all your finances first and see exactly where you’re at and what position you are in. This will help you going forward to have a clearer look at your financial position and see what you need to do to rectify it and put yourself in the best stead possible. Here are a few top tips you can utilise to sort your finances this year.
Set Yourself Budgets
Without a budget, it can be easy to spend blindly, overspending at the beginning of the week or month and then having to dip into your savings at the end of the month. By setting yourself a budget you can keep track of your spending and where your money is going a lot easier. You will know how much you have left to spend on certain things and when to stop buying things. It will give you much more clarity as to where your money is being spent and what you can and can’t afford.
Repay Your Debts
Most of us have some form of debt, whether it be store finance or a credit card. It is a good idea to get this paid off as quickly as you can, starting with the highest interest one first. If you don’t, you could find you are paying mostly interest and nothing back of the actual debt. This is a huge waste of money that you could be saving each month. If you do get a loan or credit card, make sure you do a calculator such as a car loan calculator to ensure you can afford it. There are many good deals out there, but you want to ensure it is within your price range to pay off within a good amount of time.
Make Sure You Have an Emergency Fund
The phrase “save it for a rainy day” used to get thrown around a lot and it is a good thing to have. Siphon away a small amount each money into a separate account that can be used in an emergency. The last thing you want is for your boiler to break unexpectedly and for you not to be able to afford to fix it. By putting away just a little bit each money you will soon have enough to cover you for any unexpected disasters that may occur.
Move Your Money to a High-Interest Bank Account
There are many bank accounts out there, all with different perks and interest rates. Look into the ones with the higher interest rates so you can make money simply for having your funds with them. A lot of bank accounts will also offer you a reward for switching, such as a voucher for a store, a cash bonus once you have been with them for a certain amount of time or an interest-free overdraft. Be sure to look into this when choosing which account to move to. Some accounts don’t offer it if you have had an account with them before so it is worth keeping this in mind.
Look Into Your Mortgage Rate
It is a good idea to look into your house mortgage and what you are paying to see if this can be reduced. If you can afford it, try to overpay on your mortgage where possible. This could help you to knock years off your mortgage and get it paid off quicker. It is also a good idea to check that you currently have the best possible deal available for your mortgage. If you don’t, you could soon be saving hundreds of dollars a month on what you pay.
Get Apps That Save for You
If you want to save but don’t know where to start, why not look into the many apps that can save for you? There are apps such as Plum which you connect to your bank account and they save money for you each month. It doesn’t have to be much, but you don’t notice it come out of your account and can soon find that it adds up to a good amount. Bank accounts such as Starling can also help you save. They have a roundup feature so when you spend, it will round up your spending to the nearest dollar and put the additional money into a savings pot. For example, if you spend $10.40 they will put the remaining 60c into your savings pot. This is another way to save that you don’t notice but can add up fast.
Don’t Buy What You Can’t Afford
It can be tempting to spend on a credit card as it doesn’t feel like the money is coming out of your account. However, the best rule to stick to is if you can’t afford it, don’t buy it. Instead, you should save and only buy it when you have enough money to.
These are just a few top tips that can help you to sort your finance this year. The sooner you get into the best financial position the better. It will get rid of a lot of stress in your life and make spending, saving and predicting where you will be at money-wise in the future, a lot easier. What are your top tips for sorting your finances? Let us know in the comments below.